The View from Inside: How we survived Sam Bankman-Fried (House of Cards, Part 2)

[00:00:00] Hi everyone and welcome to another episode of Crypto Parabellum Podcast. We usually don't start this way, but I feel it's worth putting in an intro to this episode. This is our 14th episode we've talked about

[00:00:12] a breadth of issues for when we started in the summer. And we don't talk about their business a lot because you know they're just humble guys, but if you don't know, Joel, one of the co-hosts of this podcast,

[00:00:26] is the CEO in Alan is the CEO of a company called Path Crypto. Path was formerly known as Stack to the rebranded recently and they are in Alameda portfolio company. This episode we go through

[00:00:43] exactly how Stack at the time became in Alameda portfolio company and some of the interactions that they had with Sam over the years, dating back to like the start of 2020. Even before the co-host crash

[00:00:59] and talking to Sam about becoming part of their portfolio it's pretty clear to see and you're going to listen to it and I think a picture will be painted about how Sam was able to pull this off based on

[00:01:17] the interactions that these two men were willing to recount out of the sake of transparency and what their experience was like with Sam Beckman Fried and Alameda. You hear things about how they met, how Sam was pressuring them to take FTT in lieu of dollars in their investment

[00:01:39] about Sam advising on how to escape regulation, how to create shell companies. And the thing about this episode is something that Joel says very briefly and we kind of gloss passive but I'm putting it out right now. Stack was one of Alameda's first 10 investments on the equity side.

[00:02:06] They went on to have over 400. So this is a little bit of conjecture but is it too far of a stretch to say that the things that he tried with stacked that Joel and Alan and Steven

[00:02:21] and the board of directors Rebuffton said no we don't want to take your advice later became required that you had to take FTT that you had to treasure with FTX. I think those the

[00:02:35] stories that are coming out now. So hopefully this helps shed some light on what it was like to partner with Alameda and with Sam and I think this is an unbelievable episode. If you have questions or if

[00:02:48] you have comments about this episode, you want to know more there's something you feel we left out. Shoot us a note send us a direct message on Twitter. It's at Parablem pod at PARABL

[00:03:02] L UMPOD. I'll make sure the guys get the questions and we'll try to get back to you. If you have a store, you want to share and let us know without further ado here is the episode. It's the best

[00:03:13] one probably the most impactful one we've ever done and may ever do so enjoy. Crypto Parablem pod I'm so number 14. 14 episodes and you know, you could argue that this didn't even really get

[00:03:46] interesting until like you know a couple weeks ago. Good morning Alameda how are you Joel's here too but he's off camera. I am doing well it's been a while too weeks so yeah well is relative I'm doing fine.

[00:04:01] Yeah there you go. I mean probably better today than before because we actually have a little bit more clarity even if it's not good. I think part of it was not knowing was driving me crazy. I think every

[00:04:13] day gets a little bit better at the same time every day gets a little bit worse as more and more information comes out. I think we've still probably only barely scratched the surface and this is going

[00:04:23] to be a trickle for probably years and I think it will get tough maybe to ignore but at some point you'll probably have to just ignore it because it's going to be every day every week a little

[00:04:38] detail little detail and you know death by 1000 cuts. Yeah it just becomes background noise at that point so obviously there was incredible crypto volatility you guys run a crypto company so we had a

[00:04:53] couple weeks off I had a baby you guys had some stuff thrown on your plate and so we had Dale and Kaz in last week again thank you to them for pop it in and being a guest host well shit was crazy

[00:05:05] that was fun but it was really more about like let's talk through the basic timeline of events and what do you think about this did you have an Iraq it's you know bubble blot just very

[00:05:14] conjecture how do you feel where we go and it was it was a great episode I mean from an entertainment perspective we didn't get into a lot of the details and obviously you're both technicians

[00:05:23] builders in the space a little bit more so than well anybody else that has appeared on this on this podcast myself included so it should be fun to pop into this this week in a little bit

[00:05:32] greater detail but I've never I haven't really I don't think I've spoken to you either of you except provide text on this so I'm curious like as this was all unfolding I was in a hospital room

[00:05:45] on my phone so that was pretty wild to like see the text between Sam and CZ and I was like is it now gonna be called by an answer rena in Miami what the hell is going on it's like that was

[00:05:56] like kind of where my brain when it's dumb as that is so like I'll start with that I don't go to Joel like you first started like seeing this stuff kind of go down like how did you how did you view

[00:06:05] this like what was your initial reaction and did you know that where we are now was where we were headed or did you have hope initially so the first thing I can remember is the weekend before

[00:06:16] Tuesday Tuesday sort of when everything blew up so the weekend before I think you started to see questions and rumors as FQX was starting to get pressed for withdraws and at that time I'll just

[00:06:29] speak for myself I was still I was still someone that really looked up to Sam and had a ton of belief and everything he was doing and so I watched assuming everything would be fine that was my if

[00:06:44] I'm of completely honest a Monday morning quarterback and say oh no we knew it was coming all long that's just not true um I thought everything was going to be fine so they struggled through

[00:06:55] the weekend with with a bank run with withdraws my assumption was that Monday comes you can now wire from general bank accounts and pull money from other places that would probably be the

[00:07:08] end of the issues that was my thought over the weekend so I vaguely remember going back and forth with Joel so I was just talking about wow this is crazy like they'll get out of it no worries it's

[00:07:19] FTX um Monday comes around and I believe they actually the opposite happens they don't solve anything it gets worse and I believe with Joel is actually stopped on Monday and then at that

[00:07:31] point I would say I started to get pretty nervous um full disclosure I didn't have any money on FTX.com I had money on FTXUS at the time that FTX.com paused I took all my money out of FTXUS

[00:07:46] that was still available and and possible at that time my opinion at that time was that these businesses are different FTXUS I know is regulated I believe has one to one backing and would be fine

[00:07:59] took my money out anyway because it's just unnecessary risk then Tuesday comes I think around this time it's it's 10 o'clock Eastern I think it was around this time if not a little bit earlier um you know

[00:08:10] Sam put out uh tweet about their acquisition their first investors are last investor and we just sold the finance and I remember immediately going back and forth with Joel being like just what what

[00:08:23] I think we call each other and probably said the word what 45 times just like a lot of weird silence um it was just disbelief very very strange very very surreal and I think at that time

[00:08:36] we still really didn't yet know the level of potential fraud that was there we were just saying like wow I can't believe FTX is done like they they got screwed is the way that I felt or looked at it

[00:08:51] at that time and wow was I wrong so that sort of is the first couple days and in my mind I'm sure we'll get into the rest of it but that that was my initial reaction interesting so Joel you had a

[00:09:02] little bit overlap there for me just to have what Allen said since he was kind of talking about your conversations but you might walk us walking us through how this all broke to you obviously

[00:09:10] you were a crypto company element as a you know played a small role in that uh what we were experienced like well definitely talk about I think much of this conversation probably around Allen and

[00:09:24] my personal relationship with FTX Alameda San we're we were probably closer to them than 99.99 percent of anyone who will ever listen to Spockcaster participating crypto so we have this unique perspective you know my my my overall feeling was one of like disappointment and sadness

[00:09:45] um like Allen I had I had most of my stable coin exposure was on FTX U S so what so here's what kind of went through my head as someone who is out and I were you like uniquely position to

[00:10:00] lose all of her money in this because we should have trusted Sam more than anybody else um so the way it broke down for me was pretty simple. Alameda rumors are coming out don't care no one understands their balance sheet anyways and they're infinitely wealthy like obviously

[00:10:18] they've done nothing but print money like I don't care where coin does guys to say. Then then you know we get a couple more days into that that new cycle um and then for me again I'm just describing it

[00:10:31] from my point of view for me uh the next like line of fun was FTT. Well I don't really care about that either. I've been sitting in tables for the better part of a year. I'm not exposed directly

[00:10:44] to crypto assets. Yes at this time I'm exposed to the exchange but I don't really care like it's okay so CZ is gonna do a CZ you know is gonna you're gonna help these bags like whatever didn't

[00:10:55] really think much of it but then this installments these stuff regarding Alameda and their over collateralization of FTT is what started to get me nervous but what really got me the most nervous was Sam

[00:11:10] you know I'm sitting there kind of consuming all of this as a consumer like everyone else but knowing Sam and having this like unique and insight into how he has handled situations like

[00:11:22] this before it's not the first time Sam Alameda or FTX has had fun or people whatever right like and to his own detriment he's usually overly communicative as we've seen now recently and

[00:11:36] now these have nothing better to do than tweet so for me I'm sitting there and and stuff starts really getting shady with FTX but there's nothing I can do about it in my money is on FTXUS and

[00:11:47] I know Brett the CEO of FTXUS formerly and like Alameda I'm feeling okay about it and then I'm like you know what out of an abundance of caution here let me just like see if the wire transfer is

[00:12:00] still working so what I did was I wire transferred a pretty small amount like less than less than 100k to my bank account like directly from FTX and it gets processed quickly I'm like oh okay

[00:12:15] well then I feel good then Sam tweets and Sam tweets and says FTX is fine assets are fine and this is at nightish my time I don't remember what to I think Monday and I'm like oh okay well that

[00:12:27] makes me feel better and everything must be fine then because Sam finally tweeted and said everything's fine and assets are back one to one or whatever gap-botted the idea of the out billion dollars in cash no I don't know if you actually have billion dollars in cash I

[00:12:39] don't know where it's fine they already processed six billion dollars with a withdrawal from whatever so I go to sleep I wake up the next morning and I check Twitter and no tweet 12 13

[00:12:50] 14 hours from Sam and I'm like huh this is I and I opened my phone and I googled time in the Bahamas and it was like 930 in the morning for something like that 930 10 in the morning and I'm like

[00:13:01] he should definitely have tweeted by now and then I started thinking of myself like why did I just wire you know a little bit like why did I take all my money off FTX like why did I like why did I do that

[00:13:11] and then I started getting nervous and then again not tweeting not he's not tweeting like another hour goes by I'm like fuck this as my log in FTX US and at US DC like on chain get the rest of the

[00:13:20] shit out and it hits my coinbase account in five minutes that I'm like so then I tweeted to the world on my hey everyone just you know I like moved all my life yeah it's just because this is

[00:13:30] all super shady and then literally hours later our first investors are last and then a couple days later bankruptcy so for me like an an already kind of I think Samized like all of my

[00:13:40] pop process but the way that I lived through it was as I just described and like that's how close I was I mean FTX US remained active from what we're all staying point for another four or five days

[00:13:49] so I guess I was within a side of four or five days of potentially losing my assets to bankruptcy so that's super shady but mostly I feel super sad and disappointed because even though I got away

[00:14:00] largely unscathed this set back to the industry is almost irreparable and I've been doing nothing but talking to shareholders and employees about it for the last two weeks and there's a lot of

[00:14:10] one answered questions you that I just first off my heart was just pounding as you were telling that story and I already knew the outcome you know like yeah that's well a couple of things obviously

[00:14:30] we're friends they're gonna be like oh jerks you don't blow in these dudes because you know whatever but the fact that even though you guys know Sam better than most Elameda let an investment investing around at your organization and you both still new man yo something's not right

[00:14:46] I'm getting out of here to protect yourselves has to be I mean you've built a lot with path you've built a lot in this industry I'm not sure there's anything you guys will ever do that will

[00:14:56] speak to your individual knowledge of this space more than you be unlike that's great I'm still getting off and it's a great yeah Alan did the same thing three months ago with BlockFi another blue chip company that couldn't go anywhere because they were venture back with billions of

[00:15:10] dollars whatever he had that same scare recently yeah yeah so I was not to go too far off topic but I was sort of just thinking over this weekend how I wanted to take like a count of how close was I

[00:15:25] to losing and there were three specific scenarios that sort of came up in my mind and this cycle I told myself I learned a ton in 2017 I didn't perform very well from like an investment perspective

[00:15:39] in 2017 and so if I was going to sit around in this industry for five years I better get it right the next time and this cycle was my opportunity so to try to reflect and learn for the next

[00:15:52] time this last weekend I sat back and said how close was I to losing it all where were like the trigger points and those were Celsius block five FTX um Celsius was a small amount of money

[00:16:07] but I got it out on time because of Twitter because I took in this release and even my own like I'm not bragging here I took other people's research or other people's severe on Twitter and just

[00:16:18] said it's not worth the risk I do not need to risk 100% of assets for a 5% return right doesn't make sense not a good investment so I pulled it out a week later Celsius pause patrols

[00:16:29] blackfy I had term loans so when you when most people interact with blackfy you have an open turn loan it means that you can put money in whenever you want you can take money out whenever you want

[00:16:41] and you get a set rate if you have a large amount of money with blackfy you can negotiate individual terms with them where the lock is for a set period of months and you can negotiate the rate

[00:16:52] over what the open term rate is so I had a locked term loan and I negotiated out for a fee I had to pay blackfy to pull my money out because I was ending my term early and that was the best

[00:17:06] investment I've ever made is paying that fee to get my money out and I remember when I was talking about that I remember as literally being like I'd blackfy it can't happen but you know it's paid

[00:17:19] yeah and that being a good call and then FTX I didn't have exposure to dot com but dot u.s and it up being the same same demise so my opinion on that is FTX U.S. likely was uninvolved in this

[00:17:33] entire situation in the vast number of employees and we'll talk about that for a minute where largely uninvolved yeah but because of the ownership structure FTX U.S. is getting rolled up and so the really

[00:17:46] the sad part of that all of this makes me mad but more than anything else it makes me sad because there are millions of people six million registered users between FTX dot com and FTX dot u.s the breakdown

[00:17:59] is roughly five on dot com roughly one million on u.s six yeah six million people total have some type of negative impact and that ranges from oh I don't care it was a dust account

[00:18:12] to my entire life savings was on this exchange I am now broke I don't know how I'm going to meet rent next month and so those are that's how wide the ranges and it makes me nothing but sad for

[00:18:24] this industry for those people for the good actors and everyone who's going to everyone who is going to be cleaning up this mess for the next 10 years. Anyway, back to FTX U.S all of these people

[00:18:38] I believe their dollars were back to one the one but their assets are now rolled up into the entirety of FTX bankruptcy and it's a very possible than a U.S. user gets 10, 23 cents back on the dollar

[00:18:51] because of things that dot com did and so those were the three areas where I could have lost it all and I look back on this cycle with a lot of happiness with a lot of gratefulness I played it well

[00:19:04] I didn't do great I didn't do fine I did well like and I mean that and those were the three areas where it could have been vastly different so what I would encourage everyone to do

[00:19:16] whether you did amazing this cycle or whether you did terrible this cycle actually sit down in right down which which events did you do well in which events did you do find in

[00:19:27] and which events did you absolutely get wrecked in right them down what can you learn from that because it's going to history will rhyme next time and so that's what I would have to add.

[00:19:38] I don't I don't disagree with that and do you talk about you know you're matrixing bullets bro for the last like several months from fucking May to now and so kudos to you obviously both of

[00:19:50] you and and quite frankly I want to get into this because you alluded to it earlier kudos to both of you for knowing and insulating yourself well enough from Alameda even though you have a relationship

[00:20:04] to have it not I mean I'm not to say that it did impact your company but it could have been worse right like it could have been it could have been far worse we're having a very different conversation

[00:20:13] so I think it's worth the conversation because this is kind of how I feel that we can best serve the crypto sphere right now I'm going to set this up and I'm going to go to Joel and then we

[00:20:23] go to Allen but what I'm setting up is as soon as all the stuff comes out we're finally bankruptcy or we're gonna be acquired by Binance now we're finally bankruptcy whatever people are blasting

[00:20:35] out here's fx ventures investments here's Alameda here's you know I'll you know West Shore whatever financial and Westfire whatever the hell that was and then stacked is on there stacks listed you as an alcohol path but you were technically in Alameda portfolio company so

[00:20:55] I think it's best to say well let's do this a little bury the lead for a moment how long have you known Sam Joel Allen we met Sam in 2019 or 2020 let me put the DM's I'm 20 late 2019 but you know pretty

[00:21:20] goes back yeah not like six months right the the first one was January 14th of of 2020 that's when we had the first meeting but you know before that we definitely you know crossed paths yeah okay but that's one official like business relationship happened which is

[00:21:42] which is pre-COVID crash right like so that's like yeah yeah that was March of 2020 so like a lot of people a lot of people's crypto experience didn't begin until crypto crash happened Bitcoin

[00:21:53] Ethereum almost goes zero and then all your money printer turns on and then everything moves right so you guys were kind of new before and they weren't mean obviously he was known because he'd been

[00:22:03] around but like he was really shit at that point like like how we was in the end so that conversation obviously you guys have a company at that point and he's talking about whatever um how does that relationship develop to the point where Alameda becomes an investor

[00:22:21] in your company right like so can you talk through that you don't have to go through a deal I know that it's very granular but can you guys give like a 30,000 foot view unlike what how that happened

[00:22:32] let me kick it off of impasse the to Joel because I think the initial start was Twitter deems and actually I have a whole thread about this um that I posted probably a year ago that

[00:22:43] the deems on Twitter like they slap they really well I remember your post on that yeah so so my first DM I'll read it because this is what worked if you want to know how to get the

[00:22:56] attention of what 10 billion dollar fraudster allegedly this is the this is the way to do it apparently that's a name with this episode by the way how do you have to choose from a 10 billion dollar

[00:23:07] property russian i said hey there do you have someone in charge of partnerships that I could speak with we have about 22 million dollars a monthly trading volume we're looking to move from another exchange

[00:23:18] and he says definitely uh can I create a telegram group if so what's your handle the rest of history um and so that that is how it started we I'll made a participated in two of our rounds

[00:23:32] I'll just talk about how we got there and then give it to Joel to talk about what details um but uh yeah so starting in DM we then had initial calls uh our interest in working with them at FTX was we

[00:23:47] ran a trading bout marketplace where we offered um a marketplace of algorithms authors brought those algorithms into the marketplace we handled all of the trade automation and then users could subscribe to those authors algorithms um each exchange had uh what are called broker programs

[00:24:04] and FTX at the time did not have a broker program I think we were one of the first 10 so have involved in that broker program they designed it after a few meetings of suggestions from us

[00:24:16] and so we were really early there but then I'll give it to Joel because it's sort of his story to tell after that you know whether you want to yeah well I think the our story is less important than

[00:24:29] like the overall impact of alimator FTX ventures on the crypto landscape because our story is probably not to that dissimilar from the other 423 or some investments over the course 18 months that

[00:24:42] that group made um you know they were they were why they were definitely pre-inspirate but when we first came across alimator and they didn't have FTX ventures yet FTX was smaller than path is today

[00:24:56] by pretty much all metrics so it was a very different time and yeah so they were you know we were a young startup looking to align ourselves with kind of the next come up in in crypto vc's and providers

[00:25:11] FTX clearly was one of those it wasn't as clear then but in fast forward a couple years before they go bankrupt we looked like geniuses we were not just an alimator portco we were one of alimators first

[00:25:25] ever investments um I don't know if we were first but we had to have been out of those 400 like first 10 or something I mean we were super super early in terms of the investments this is when

[00:25:36] alimator was still a profitable prop trading firm before they even started trying to get directionally you know start making directional bets and all this other shit that they got into. So we took a small investment from them we built out the rest of the functionality from our

[00:25:51] business and we built a profitable revenue generating you know big milestone KPI hitting tech business inside of crypto so when we did our series A naturally we called alimator again and we called a lot of people we called fidelity we called DRW we called jump we called bibet

[00:26:08] and fortunately bibet was willing to lead our round and alimator co-led with with with them and so that's that's us I mean that's just some story but where yeah and just real quickly I'm not trying

[00:26:22] to I'm not trying to focus on you guys I'm just think a lot of people myself included because like I know top level I'm just kind of curious and like shedding light on how that happens because when

[00:26:30] you say there's 430 companies it's not like these guys we're in bed with every single one of them and spoon fed them into building the company and it's an expectation across all of them I'm just

[00:26:40] trying to show that like you were an independent business you knew them you got them into investing and like obviously like I'm saying kudos you guys for knowing how to work that

[00:26:50] and keeping you in arms like anyway sorry go ahead what I'm what I'm what I'm getting into is the fact that when we first met those guys alimator did respond to our emails and they did give us ideas and

[00:27:02] took meetings with us but then post series A and when everything sort of get crazy and Sam became a 10 billion dollar man he was no longer possible to get a hold of I don't think we had

[00:27:11] spoken to Sam at this point for like now over and over and over here right like we had he had stopped you know an alimator stopped responding to investor updates and stopped you know stop really caring about us because again 400 other investments but here's the truth

[00:27:26] we're also one of their only 400 investments that doesn't have a token they were not fans of equity investments for lots of obvious reasons probably it's a list of the starters right but we had a good business and we drove volume to FTS so

[00:27:44] it did make some sense for them to support us but even though we didn't have a token alimator was adamant on us starting one alit we we spoke to Sam's Sam's personal lawyer for hours in the

[00:27:56] early days about doing the token we talked a lot about the you know we just really running through it and we just kept coming back to the same conclusion which was one our business doesn't need one

[00:28:09] two the regulatory risk is too unclear um and those were good enough reasons to not have some Sam coin even though alin Steven my co-founder myself we were staring down the barrel of probably

[00:28:24] tens of millions of dollars relatively quickly for us personally by doing the token it made no long-term sense for the business and then you take it a step further alimator wanted to treasure our

[00:28:35] money too they wanted to take our capital and you know pay us interest on it we did a massive series and we said no to that as well so these are a couple of things that we did do you also remember

[00:28:47] the suggestion to take the initial round not the second round in FTT yeah and at the time we wish we had done it yeah not anymore but that's so funny or interesting um to bit from from

[00:29:02] that conversation out see if Joel remembers they suggested we take FTT and part of our we had some hesitation or reservations because we were raising the capital to run the business we weren't

[00:29:14] raising capital just like to sit on it it was like we weren't trying to just sell equity needed money for the business so their suggestion was hey well why don't you take FTT and we're like well

[00:29:26] okay we could take maybe some in FTT but we do need to run the business and the part that we do take in FTT were sort of concerned because it's like we're not we're not trying to trade we're not

[00:29:35] trying to be investors like this is raising money for the business and do you remember Sam's suggestion what to to counteract that he's like well whatever you take in FTT you could just open a sizable short

[00:29:46] auditorium and you know they would even out and a firm was like 320 dollars at the time and obviously we didn't we didn't take FTT we also didn't short Ethereum but I remember us getting

[00:30:00] off the call and we're like this Sam saying short Ethereum like that's that's weird and thank God we didn't short Ethereum because we would have been absolutely liquidated yeah thank god we didn't

[00:30:11] think of we just use common sense running our business we didn't day trade we didn't take shit coins we didn't treasure and defy farming we didn't fucking do any of that bullshit we just

[00:30:21] have a regulator business with a good board of directors and good leadership group and it's just running a good business and doing our damn best and so those things helped us but the vast majority

[00:30:30] of of Alameda poor coes do have a token did put all of their money on FTX I think over a hundred FTX companies under FTX have already filed for bankruptcy but of those 400 venture companies

[00:30:44] I think you have to mark most of them very likely down to zero the ones that do have some capital left are going to have a hell of a time raising more you know most of them don't have

[00:30:55] any meaningful business because again they're chiklins so as we all know how that works I think Joel's point is that it's possible and likely that we had a very different experience

[00:31:05] with Alameda because we didn't have a token and so they were not very engaged with us but I don't know what type of engagement they had elsewhere maybe everybody was like us where

[00:31:16] the markets all Alameda as he's like king makers but the actual people that got invested in are going to speak from wrong experience like I had a direct line to one Alameda contact

[00:31:27] and sometimes I heard back and sometimes I did it that that was the extent of it after they got big maybe all the token people had meetings every week and ton of hell been they're in a terrible

[00:31:38] position because they treasure their like to all the trustful in cities just made so I don't know I don't know what reality is but it's very possible that we had a different experience simply

[00:31:45] because we didn't have a token so let me ask a very I mean you could just be like that's a dumb question during delete it out of the episode how close did you get to be unlike fuck he's telling us

[00:31:58] to do this is guys the king maker like should we just do this like did you know was that a conversation that we had a hundred of hours we had hundreds of hours of conversations about doing

[00:32:08] the token and putting our money on ftx like putting a reasonable amount of money in with Alameda or ftx, ftx, ftx, ftx, ftx, fs to what earned yield when you have as much money as we have

[00:32:17] six seven percent damn near comes a lot of money that's a meaningful amount of revenue yeah to be clear the the token conversation was towards the end of 2020 and the the treasury was more so mattered during the second round so those happened independently at different times

[00:32:33] the token the token conversation was still when you could get sam directly and I would say we not to if I if I was trying not to exaggerate we probably had eight to ten hours of conversations

[00:32:46] with sam directly on on this and we'd so not to do it we're in the US we wanted to sleep soundly at night we didn't want any like of these like weird company structures that they suggested

[00:32:59] every time we asked like some pretty reasonable questions the answers started to fall apart and now in hindsight some of it's a lot more obvious but you hear a lot of smart people talking

[00:33:11] now about their interactions with sam and they're like oh yeah he never really knew what he was talking about or whatever it was hard to see through that when someone has had the success

[00:33:19] that he had it's hard to see through some of the just the mumbling gibberish bullshit but when we would when we would press amount of different stuff it was oh you know well like it's

[00:33:30] you know you can just move this fugazie over here and just register company in the sicklees or the seashells or the seashells and then you can just even you can have a shell company

[00:33:41] in the Bahamas and you can do to us and we're just like no we're just like how about we just use JPMorgan Chase and we just run a business. Do you think so that those trappings of a guy like sam

[00:33:55] because obviously when you guys first guy involved he wasn't he wasn't saying yeah like do that was fucking you know. Yeah but he kind of was so like the the first time I was ever exposed to

[00:34:04] our matter ftx was you may remember that video that was I think the first time they became popular at least to me was it was a video of them trading like this massive Bitcoin order on Binance. Remember

[00:34:17] there was like this huge seller on Binance. I can't remember how much it was maybe 20 billion to a no I don't remember anyways there was this huge seller on Binance and there's maybe a bit

[00:34:26] close around 16 17 k and there was a review of someone behind sam basically recording his whole talking to his trading dust team and that got a ton of traction on Twitter and then look Martin

[00:34:39] did a interview with him shortly after that and I remember like this guy's like a genius and I still think that I still think that easy dude I'm just gonna be honest about my opinion

[00:34:55] I still think that he's incredibly smart. I think he made bad decisions that doesn't you can be smart and make bad decisions. But yeah but I think it's hard to argue that he's not smart.

[00:35:10] The other question a lot of people have asked me because you have to also understand man like thanks giving us about to be rough dude. If there's anyone in any of our social circles yourself Jared included and this is probably something that resonates with anyone listening to like

[00:35:29] you're probably the crypto guy or girl in your circle well when you are when you're the crypto guy but then also it's your whole life and your a blue check on Twitter and you run a business

[00:35:39] and on top of all of that the only thing any of these normies have heard from me for the last 18 is Sandbankman freed you know invested in my business and FTX and this that and the other like

[00:35:49] you should go all in on Solana these are things that I've said to my friends over the years now those were all it even when I was telling people about Solana those were at prices even lower than

[00:35:57] the even you know even today. My point is like yeah it's it's like fuck man we we told like everyone about FTX and Sam and team and now it was just wrong now is just

[00:36:18] yeah so Jules on the right there happened to be yesterday right so like I'm going to my loss to watch some football like we had something we do together and people that were there know that I'm in crypto then know that that's my life they don't have

[00:36:36] any interest in crypto know like what's this this FTX thing I keep seeing on the news this has reached everybody you see it like my wife sends it to me like the articles that she gets

[00:36:46] she's not really into crypto but it's like on on her Instagram and it's on her Apple news and everyone will see this and this is going to be a black eye for use to come and personally

[00:36:56] it's it's embarrassing and it's hard it's hard to cover I have stopped I cannot justify what happened I'm not going to try I'm gonna say yeah this really sucks this was incredibly unfortunate it was

[00:37:08] probably fraud it's I don't condone it but it happened like I'm not gonna try to explain it away and there's a lot of questions as to what is the future for crypto and I'm not gonna pretend to be

[00:37:19] like the bullboy of like oh it'll be fine we'll get another one like no we have years a lot of words to recover and that is reality it really sucks to be the crypto guy or gal in your circle right

[00:37:33] now more a lot more so than I did back in 2018 that's for sure yeah yeah like people people it's like insane but like people were pretty close to me are like oh are you like okay like

[00:37:46] are you gonna have to sell the house like my guys I have done very well for myself I could lose all my crypto and still pay for my goddamn house it's it's not about me this isn't industry issue like

[00:37:59] at the end of the day fuck man like yes I continue to avoid bullets that's not why luck or accident I've been here for seven years but as an industry and as a as an enthusiast of the industry

[00:38:11] when people are asking me this Thanksgiving bear market which we've had like five Thanksgivings were things have been absolutely shit every other one I'm like oh this is an opportunity now I'm like solana $12 on a set of things so eat that 1200 probably not yeah that's tough because

[00:38:30] I don't you know it's even especially tough when again we run a business that that the future depends on doesn't that's 100% depend but like 98% depends on crypto yeah yeah well look you know

[00:38:46] I don't mean shit to you guys because we're friends but as an analyst as someone who's been in markets for a long time not only personally but professionally and for your company there was

[00:39:03] about a thousand times that you guys could have been reset back to zero and not only did you not get reset back to zero you did the right things you made the tough choices to still position

[00:39:16] yourself moving forward which right now how many people can say that blockfire can't okay there's a ton of you and coinbase and in crypto dot com are like that's about it that's

[00:39:31] about it there's three or not is a crypto dot com yeah not the one that the dude block shade dot com start after that comes fuck block shade dot com block shade dot com coordination you guys are like

[00:39:44] really the three that I think of that were like yeah no we're not really impacted by that because we never really it fucking made that deal with a devil and everyone else did and that is extremely impressive

[00:39:57] both and it speaks to you guys ability to run a company and not be like crypto is everything and therefore we will lean all in and fuck it all because that could have easily been anyone it could

[00:40:09] have been you guys and you weren't so not that you guys need me to blow smoke but I am more impressed with you guys today than I ever have been so could that thank god it wasn't like my money like yeah

[00:40:18] I had my money but like in terms of like the company like if that was all my money I may have made different decisions but because it was other people's money that they trusted me with

[00:40:27] Sam could have taken some notes like we we offer very differently like we operate from a place of like protecting that money it's better people's money they were very very very hard for all of

[00:40:38] those big VC names that all of you guys see out in the news from Sequoia to Tiger to all those smaller names you've never heard of ninety nine percent of those are propped up by LPs or limited

[00:40:48] partners who are investors that make up all of that money it's not Sequoia's money it's it's people underneath Sequoia that give their money now Sequoia is a different beast but my venture capitalists on average were not alimetre with unlimited billions of dollars there

[00:41:05] firms with tens of millions in a fund so investing ten percent of that one million or something like that in us is a massive vote of confidence so protecting that investor capital has always kind

[00:41:15] of led but if I can give any advice anyone listening who just went through a bull market and lost a good amount like I went through a bull market before I lost ninety percent of what I made

[00:41:25] and I wrote on the window in my office after the fact don't be greedy because in doing my retrospective that I want to talk about it is called I asked myself in January January but in

[00:41:36] early twenty eighteen after pretty much I'm in January how did I just lose all my money like it was mostly I was just being greedy like I just you know I just didn't use a lot of common sense

[00:41:46] and that stuck with me this entire bull market it cost me millions of dollars I didn't do things that I could have done to get easier money but I think just using common sense you know being moral

[00:41:58] operating with good intention and you know trying not to get too caught up in the moment or things that are going to help you now lose all your money if we're fortunate enough to get another

[00:42:07] full of. Which quite frankly I think we will I know that like it's a little early and like the moon is still fresh but I think it's going to take a long time I think like we talked about

[00:42:17] last week with with cause and Dale you know I think it is the death of centralized crypto unless you're doing it like you guys are doing it unless you you're doing it like Coinbase

[00:42:28] is doing it where look we're leaning in the regulation we're going to do we have to do we're going to hold we have to hold and then you actually can feel safe about that but like some random

[00:42:36] overseas centralized exchange real like oh yeah they're Bahamas man it's cool they got good deals like they don't never happen again because why would you there's just no point so it may evolve

[00:42:45] them at take time we might see like we talked about those security tokens or whatever it is but it's going to take a little bit so and it looks like you want to say something good. It looks like

[00:42:56] I want to say something um yeah hi I would just want to say that I feel really really bad for the alameda or excuse me for the FCX employees because I think this is public so I'll say it

[00:43:12] but they got screwed at so many different points remember that they gave up a big portion of their lives to probably like lead to move to the Bahamas and live with their coworkers. Would you

[00:43:22] like unless you're like 22 or 23 would you like to leave your home move to the Bahamas and live in dormitories and work 24-7 for most people the answers like nope but that is what all

[00:43:36] are most of them did that were in the Bahamas so they not only gave up a lot of their personal life to go build someone else's dream and their own dream as well to to be in that type of experience

[00:43:50] they took salary sometimes in crypto but even if they took an in cash they took it into their FTX account which is now gone so let's say you worked there for two years you kept all your money

[00:44:03] on your FTX account you spent on your FTX card I think that's the story for most of them your money's gone the last two years of your life you worked for free or you'll get back 10% on the dollar in 10 years

[00:44:16] so when you don't need it anymore you they were offered FTX equity at a discount and they were told that this is a great opportunity so not only did they lose the cash that they were paid they took

[00:44:28] cash at that point that they probably had from previous work or previous businesses invested it into FTX equity which is now worth zero I mentioned that they lived in the FTX HQ sort of you know

[00:44:40] giving up all their time and it's all gone and so it's easy to say screw those guys they were in on it I personally do not believe that I think there were probably four to five people that were in on it

[00:44:56] it was all the core team I think there was probably a backdoor that avoided the regulatory and audits so that this was only known to a very small core percentage of people and the rest were good

[00:45:14] employees working hard in a what sounds like now non ideal environment under a non ideal manager for almost now nothing and on top of that their reputation their their CV their resume will now carry

[00:45:29] FTX for a long time to come and for the companies that are still out there hiring I would encourage you to not look at FTX employees obviously due to diligence like ask hard questions that's all reasonable

[00:45:43] but do not blacklist someone that busted their ass that gave a big portion of their life to build the crypto dream and now are absolutely some of in some of the worst positions I feel

[00:45:58] really bad about that and I feel really bad about blackfires well it was they made mistakes do not get me wrong they made mistakes in their lending book to 3AC then they were forced to make mistakes

[00:46:11] in their deal with FTX because they had no better option and I also know that they were pressured to keep their balance sheet on FTX by some of the people who were negotiating the FTX deal it was

[00:46:24] sort of do this or you have no deal at all they did their best they made some bad decisions but now you have like go and read it go to the block five thread and read people stories it's so

[00:46:37] sad it's so so sad and that is why this industry will take years to recover because it ruined block five FTX Voyager hot or not FTX app which is blockfolio, Celsius, ruined people

[00:46:55] people were treating it like a savings account and it's gone which quite frankly was not unreasonable it was not reasonable I'm feeling a couple of times like no shareholder would have ever questioned me if

[00:47:09] I put $20 million on FTX they would have won it but like oh that's great yeah well obviously but like no one would have before because again when you have Tom Brady and the stadium and Formula

[00:47:19] 1 and and Super Bowl commercials etc etc etc there is nothing safer I would have trusted my money more with FTX than fucking Coinbase now maybe that says something about my judgment that

[00:47:31] I need to refer it on but in that moment I just I feel like it's so so many people got caught up smart people it's just it's just so sad and just just echo Allen's point man like 99.9% of people inside the

[00:47:48] FTX ecosystem and there are hundreds of subsidiaries had no idea I spoke to Brett Harrison on Friday of last week so he's this former CEO of FTX US who stepped down a couple months before all this happened

[00:48:03] purely out of luck because he wanted to rise on thing and went another direction and I can speak each we didn't speak about this stuff but I can speak with confidence that he and

[00:48:13] no one on his team and no one else really at large in the company outside of that core group that I would mention had any idea or any way to know again he was running a regular business and offered

[00:48:23] socks and everything like his balance sheet was good his books were good his CF his finances were good and there's no way to know and now not only did not alone not only do they have this like black eye

[00:48:33] because of the logo on their resume but think about someone like Brett I don't know the actual numbers at all but you know this is a CEO of this company that was worth 30 someone billion dollars I have to imagine

[00:48:44] the equity loss for him the equity downside is his nine figures and so like always me like some rich you know super educated white man lost nine figures but well it doesn't matter like at the

[00:48:57] people and family's men cannot like people have families like people have lives like people like did not deserve this and they're good people who opened a lot of doors for me who opened a lot of

[00:49:07] doors for talent who opened a lot of doors for people in this industry who hopefully now won't have doors slam back in the crisis I certainly am going to be opening those doors for those people

[00:49:15] and I've heard your one else too as well. I if I could end this on one though I and I know we're short on time my take on this entire thing is Sam made a terrible decision FTS excuse me

[00:49:27] Alameda was caught up in the terror Luna situation they had a massive hole Sam at that point had two options he could take the ego hit and the reputation of damage let Alameda fail let them

[00:49:40] lose their money which is Sam's money anyway let them lose that money close up shop you had a 40 billion dollar business in FTS that had a sterling reputation you had a sterling reputation

[00:49:55] everyone believed in you you had every opportunity in the US I think we'll get into that in future episodes of sort of the doors that they had opened for them not fair to US companies by the way

[00:50:07] you had every advantage you could have taken the L old up Alameda said hey that business failed but I have a 40 billion dollar bowhamid that I'm going to run the rest of my life and you decided

[00:50:19] that your dollars in Alameda were more important than effective altruism than your legacy than this industry you made that decision and so all this stuff on Twitter where it's like

[00:50:31] oh we did the best we could I'm so sorry reflect on that you made a bad decision and you are ruining the lives of millions of people millions so you have now done more harm to millions of people

[00:50:46] than you will ever recover from because I don't think you'll ever get the chance again so anyone with this effective altruism sort of like spin to their lives there's something it smells

[00:50:57] about that because it just doesn't make sense and now it is caused more harm from this one person than they will ever do good and so it's on Sam as the CEO it's on you to make that one bad decision

[00:51:13] that led to another bad decision and another and another but like come on stop yeah I don't disagree I know you guys are both up against it Joel I think I'm on the right side of my just hold it

[00:51:29] the people that are still in the ecosystem use this as an opportunity to remind themselves of why decentralized finance has so much potential we can't run it like the wild west like let's not forget there's been fifty billion dollars with the defy hacks since defy summer 20

[00:51:50] billion this year alone so let's make no mistake there's a lot of fraud happening across the board and defy and you could argue makes it easier to commit but it does this continues to remind me

[00:52:05] kind of why we got here to begin with and I think those problems a lot of those problems are solvable and I just really hope that there's somebody way way smarter than me who's willing

[00:52:14] to take this on the chin and then keep working to solve that problem because I'm not going to figure that out myself neither is Alan or Jared but if you're listening and you still like you know

[00:52:23] believe in the greater kind of vision of this decentralized economy finance being a part of it blockchain doesn't even just have to include finance of course hopefully you know hopefully this is

[00:52:35] is nothing but a setback and doesn't prove to be a death blow I really hope people stick around yeah I agree and you say you're not the guy but you know what I firmly believe that both of you

[00:52:46] are a piece to that long term solution not the solution but I think you're a piece to it because you maybe decision to do the right things in a regular regulatory way which quite frankly is the

[00:52:55] only way people are going to wait it again if it's not it's not regulated by the US where it's back and you guys find out that we're going to answer a lot of questions for you and if you're

[00:53:08] your everyday investor that wants upside assuming this industry comes back we are going to solve that problem but blockchain and web 3 and even crypto goes so far beyond just investing it goes so far beyond just up only your token it's this massive opportunity from an economy standpoint so

[00:53:26] looking forward to seeing how it plays out. I think it'll play out well but you know thank you with thinking I'll let it drop off I said I'm a no because then we had a hard stop at 10

[00:53:41] you know thanks for coming on and talking about this because I think I think this is going to easily be our most listen to episode I think there's a good chance people want to know what

[00:53:48] something like USA and really like obviously you're not going to do it but I'll do it for you crypto needs more people like you and Alan that are willing to

[00:54:00] not accept 10s of millions of dollars in FTT token because I mean that had been a dollar the time went to 80 I mean like that's it that's game overdue your own an island somewhere like you could have

[00:54:09] done that if you were willing to cut corners and you weren't and that is now we can all see 3FC was a fraud Sam was a fraud a bunch of other ones were lunuk obviously right like

[00:54:23] those people all heard that cyber call and we're like fuck yeah I'm gonna get rich and you guys didn't because of your morals and who you are so I'll continue to be in that fucking drama

[00:54:32] so I love you guys but you know it's gonna it's gonna take some time to build back but we're going at my brother yeah dude let me get us out of here and we'll call the week we're going to

[00:54:45] have more details later on ladies and gentlemen but I think this was conversation with that so thank you for your responsibility yeah yeah you're doing it crypto parable and podcast episode 14 house cards part two with Joel and Alan see you guys next week